DoD's $31.7M contract for B-2 microelectronics solutions awarded to Northrop Grumman via full and open competition

Contract Overview

Contract Amount: $31,722,004 ($31.7M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-07-31

End Date: 2028-01-31

Contract Duration: 1,279 days

Daily Burn Rate: $24.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THE ADVANCED TECHNOLOGY SUPPORT PROGRAM (ATSP) CONTRACT ACQUIRED PROGRESSIVE MICROELECTRONIC CAPABILITY SOLUTIONS FOR THE B-2 DATA ENTRY PANEL

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73135

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $31.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: THE ADVANCED TECHNOLOGY SUPPORT PROGRAM (ATSP) CONTRACT ACQUIRED PROGRESSIVE MICROELECTRONIC CAPABILITY SOLUTIONS FOR THE B-2 DATA ENTRY PANEL Key points: 1. Contract aims to enhance B-2 bomber data entry panel capabilities through advanced microelectronics. 2. Full and open competition suggests a potentially competitive bidding process. 3. Contract duration of over 3 years indicates a significant, long-term need. 4. Cost-plus-fixed-fee pricing structure may incentivize cost control but requires careful oversight. 5. The award to a single large contractor, Northrop Grumman, warrants examination of market concentration. 6. Performance context is tied to a critical defense platform, the B-2 bomber.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without detailed cost breakdowns and comparisons to similar microelectronic development efforts. The Cost Plus Fixed Fee (CPFF) structure can lead to cost overruns if not managed diligently. While the total value is $31.7 million, the actual profit margin for the contractor is fixed, which can sometimes lead to less incentive for aggressive cost reduction compared to other contract types. Further analysis of the fixed fee relative to the estimated cost would be beneficial.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This approach is generally favored for promoting competitive pricing and innovation. The number of bidders is not specified, but the process itself suggests an opportunity for multiple companies to vie for the work, potentially leading to a more favorable price for the government.

Taxpayer Impact: Full and open competition increases the likelihood of receiving competitive bids, which can translate into better value and lower costs for taxpayers.

Public Impact

The primary beneficiaries are the U.S. Air Force and the B-2 bomber program, ensuring continued operational capability. Services delivered include the development and acquisition of progressive microelectronic capability solutions. Geographic impact is primarily within the defense sector, supporting national security objectives. Workforce implications may involve specialized engineers and technicians in the microelectronics and aerospace fields.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts require robust oversight to ensure costs remain controlled and the fixed fee is reasonable.
Reliance on a single large contractor for critical defense components can raise concerns about supply chain resilience and future competition.
The specific nature of 'advanced technology' implies potential for evolving requirements and scope creep.

Positive Signals

Awarded through full and open competition, suggesting a fair and transparent procurement process.
The contract addresses a critical need for the B-2 bomber, a key strategic asset.
The duration of the contract allows for sustained development and integration of new capabilities.

Sector Analysis

This contract falls within the Engineering Services sector, specifically focusing on advanced microelectronics for defense applications. The market for specialized defense microelectronics is often characterized by high barriers to entry due to R&D costs, intellectual property, and security requirements. Spending in this niche is driven by the need for cutting-edge technology in military platforms, with contracts often awarded to established defense contractors with proven expertise.

Small Business Impact

The contract data indicates that small business participation (ss: false, sb: false) was not a primary set-aside criterion for this award. This suggests the contract was likely awarded to a large prime contractor, Northrop Grumman. There is no explicit information on subcontracting plans for small businesses, which is a common requirement in larger defense contracts. Further review of the subcontracting goals would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Defense Microelectronics Activity (DMEA) and the relevant Air Force program office. Accountability measures would be embedded in the contract's performance standards and reporting requirements. Transparency is generally maintained through contract award notices and public contract databases, though specific technical details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

B-2 Bomber Sustainment Programs
Advanced Avionics Development
Microelectronics Research and Development
Defense Industrial Base Modernization

Risk Flags

Cost-plus contract type requires diligent oversight.
Potential for sole-source reliance on specific advanced technologies.
Long-term sustainment of aging platforms can be costly.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. THE ADVANCED TECHNOLOGY SUPPORT PROGRAM (ATSP) CONTRACT ACQUIRED PROGRESSIVE MICROELECTRONIC CAPABILITY SOLUTIONS FOR THE B-2 DATA ENTRY PANEL

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Microelectronics Activity).

What is the total obligated amount?

The obligated amount is $31.7 million.

What is the period of performance?

Start: 2024-07-31. End: 2028-01-31.

What is Northrop Grumman's track record with similar advanced microelectronics contracts for critical defense platforms?

Northrop Grumman has a long history of developing and integrating advanced technologies for major defense platforms, including the B-2 bomber. Their experience encompasses a wide range of systems, from avionics and electronic warfare to communication and data processing. While specific details on prior microelectronics contracts for the B-2's data entry panel are not publicly available, the company's extensive portfolio in aerospace and defense suggests a strong capability. Performance on previous large, complex defense contracts would be a key indicator, though specific metrics like on-time delivery, budget adherence, and technical success rates would need to be reviewed from past contract closeouts or performance reports.

How does the $31.7 million value compare to similar microelectronics development contracts for aging aircraft platforms?

Comparing the $31.7 million value requires context on the scope and complexity of 'progressive microelectronic capability solutions.' Contracts for modernizing avionics or critical components on aging platforms can vary significantly. For instance, a full avionics suite upgrade could cost hundreds of millions, while a specific component enhancement like this might range from tens to hundreds of millions depending on R&D intensity, required testing, and production volume. Without specific benchmarks for B-2 data entry panel upgrades or comparable platform modernization efforts, it's difficult to definitively state if $31.7 million represents high or low value. However, for specialized, advanced technology development for a strategic asset, this figure appears within a plausible range.

What are the primary risks associated with this Cost Plus Fixed Fee (CPFF) contract structure for advanced technology development?

The primary risks with a CPFF contract for advanced technology development include potential for cost overruns and reduced contractor incentive for efficiency. While the fixed fee provides the contractor with a defined profit, the 'cost plus' portion means the government bears the risk of actual costs incurred. If development proves more complex or expensive than initially estimated, the total contract cost can escalate significantly. Contractors may also have less incentive to aggressively control costs compared to fixed-price contracts, as their fee is fixed regardless of the final cost. Robust government oversight, detailed cost tracking, and clear performance metrics are crucial to mitigate these risks and ensure value.

How effective is the Defense Microelectronics Activity (DMEA) in overseeing contracts like this to ensure program effectiveness?

The Defense Microelectronics Activity (DMEA) is specifically chartered to provide microelectronics support to the Department of Defense, including research, development, and acquisition. Its role suggests a high level of expertise in this specialized field, which should translate into effective oversight for contracts like ATSP. DMEA's effectiveness would depend on its resources, staffing with subject matter experts, and established processes for monitoring contractor performance, managing technical risks, and ensuring alignment with broader DoD requirements. Their focused mission on microelectronics implies a potentially higher degree of technical insight compared to a more general contracting agency.

What are the historical spending patterns for microelectronics modernization on the B-2 bomber program?

Historical spending patterns for microelectronics modernization on the B-2 bomber program are not readily available in public databases. However, it is common for aging strategic platforms like the B-2 to require ongoing investments in component modernization to maintain operational readiness, address obsolescence, and incorporate technological advancements. These investments can span decades and involve numerous contracts for various systems, including avionics, sensors, and data processing. The total lifecycle cost for such a platform is substantial, and specific modernization efforts, like this one for the data entry panel, represent a portion of that overall sustainment and upgrade expenditure.

What is the potential impact of this contract on the broader defense microelectronics industrial base?

This contract, awarded to Northrop Grumman, could have a mixed impact on the broader defense microelectronics industrial base. On one hand, it supports a key player in the sector, potentially enabling further investment in R&D and specialized manufacturing capabilities. On the other hand, if the contract involves significant proprietary technology or relies heavily on Northrop Grumman's internal capabilities, it might limit opportunities for smaller, specialized firms or competitors. The extent to which Northrop Grumman utilizes subcontractors, particularly small businesses, will also influence the broader impact. A focus on innovation and potential technology transfer could benefit the base, while a highly concentrated award might consolidate capabilities.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: HQ072715R0001

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 1580A W NURSERY RD, LINTHICUM HEIGHTS, MD, 21090

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $63,444,008

Exercised Options: $63,444,008

Current Obligation: $31,722,004

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $21,570,335

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ072716D0004

IDV Type: IDC

Timeline